Investing in rural SMEs that promote women’s empowerment

Investing in small rural enterprises in developing countries is extremely challenging. A commitment to women’s empowerment may add to this complexity as investment candidates need to be assessed against yet another set of criteria. To be successful in promoting women’s empowerment investment priorities, thresholds and (un) acceptable trade-offs need to be clear. This can go as far as deciding to invest exclusively in women led or women only businesses.

The importance of making these goals and commitments explicit cannot be overstressed: it is key that fund managers, investment decision makers, staff and advisors have a clear mandate and clear criteria to assess how a particular enterprise can contribute to achieving women’s empowerment.

Oxfam’s Enterprise Development Programme (EDP) invests in small rural enterprises in the developing world. The programme aims to create and consolidate sustainable enterprises that deliver tangible social benefits. Women’s economic empowerment (WEE) is at the core of the investment thesis: to enter the EDP portfolio enterprises must meet strict selection criteria in terms of women’s participation and potential to promote WEE and each investment proposal must have clear related targets and milestones (20% to 40% of the total funds approved for each enterprise go towards achieving these).

The following 5 practical approaches and examples capture some of EDPs lessons learned promoting women’s empowerment in small rural enterprises.

Understanding barriers for women’s empowerment and identifying opportunities for women in the specific context of the enterprise

During the development of investment proposals it is crucial to perform a thorough gendered analysis of the context in which the enterprise operates with a focus on identifying barriers and opportunities for women at various levels including: farm, household, enterprise, market and enabling environment. This assessment should not only be used as selection criteria but should also inform the investment plan, its milestones and specific impact targets. EDP uses the following tools during the assessment stage:

Rapid Care Analysis: a rapid assessment tool to improve the design of a wider programme through gathering evidence to promote the recognition of care work and the identification of practical interventions.

Investing in training, inputs and technologies that work for women

Deliberate investments (and/or grants) are necessary to address existing inequalities in terms of skills, training and capacity building as in many cases rural women do not have access to the sort of training their male counterparts receive and/or training materials are designed for a predominantly male audience. Gender inequalities in access to resources and inputs are also commonplace. Investing in the provision of inputs and resources for women can enable them to engage with enterprises as suppliers, workers or consumers. This may also include investments in time-saving equipment that reduces women’s time spent on heavy unpaid care work.

Addressing the underlying causes of gender inequality

Social and cultural norms are responsible for many of the barriers to women’s empowerment. It is important to recognize how these impact the enterprise and its ability to create more and more sustainable economic opportunities for women. An investment in cooking lessons for men, for example can lead to a redistribution of unpaid care work at the household level which in turn may free up time for women to engage with the enterprise. To address these sensitive issues within a specific community and cultural context it is key to identify and work with (local) partners.

Supporting and investing in leadership teams: promoting the recruitment of women as managers/key staff

Worldwide women are still underrepresented in managerial positions. Investors can play a key role promoting the recruitment of female managers and key staff. This has been a particularly effective approach for EDP as female managers do not only contribute to a shift in perceptions of gender roles but are also able to identify new creative ways to engage and empower other women in their communities.

Invest in women led start-ups and initiatives adjacent to the core business of the enterprise

An effective way to promote women’s empowerment, especially in markets or value chains that are traditionally male dominated is to invest in niche ventures that are adjacent to the core business of the enterprise. This may be a women run greenhouse to produce saplings that can then be sold to the main enterprise or an input shop where farmers can purchase seeds and ag-inputs, etc. Typically these start-ups promote women’s collective action which can be an important step towards increased empowerment. EDP has an encouraging track record investing in these kind of start-ups with many becoming profitable in less than 18 months.

These approaches are mutually reinforcing and most effective when combined.

Achieving gender equality and empowering women and girls is now a global priority. The challenge is huge and so are the positive impacts this would have on poverty alleviation and the global economy.

As part of this global effort small and medium enterprises (SMEs) can play a key and leading role creating new opportunities for women’s economic empowerment. Data and research show that increased gender equality does not only help the wider economy but also has tangible benefits for the individual enterprise making this a win-win case for impact driven investors. The lessons above from Oxfam’s Enterprise Development Programme (EDP) can go some way to increasing this impact.